Winter Fuel Payments

There were two important “read my lips” moments in the election campaign. One was Clegg’s pledge to oppose a rise in tuition fees. The other was Cameron’s “contract” with the electorate on pensioner perks. Each pledge cost the Treasury a comparable amount (about £7bn and £4bn respectively). Only one politician had to eat his words.

This was always a problem George Osborne would be unable to solve. As a result of this spending review, pensioners next year will receive £600m less in winter fuel payments.

Does this break the Tory pledge in the election? Not quite. When David Cameron made his read my lips campaign promise, he vowed to “keep what we inherit” on winter fuel payments, free bus passes and other benefits to pensioners.

Most people would have expected that to mean that he matched the same payout as Gordon Brown.

David Cameron has pledged to protect the £2.7bn winter fuel payments to the over-60s — but he never promised to keep the name.

Surely it is time to stop people claiming these handouts by calling them something more appropriate that would deter the wealthy middle-classes? After all, the payment has nothing to do with fuel. Done properly, this cunning intervention could save hundreds of millions of pounds — while still permitting the needy to claim.

Neil O’Brien of Policy Exchange thought something absurdly bureaucratic would do the trick. Would you bother to claim the Voluntary Age-Related Season Specific Dependency Credit? And would you be able to ever find the forms on the internet?

My preference is for something much more unappetising. Perhaps the Old Age Support Ration? That would put off Ken Clarke and Vince Cable from sending in the application. Or maybe the Elderly and Infirm Support and Sustenance Payment?Read more

The axe is hovering over the £2.7bn winter fuel payments. But cutting this bung to the over-60s is harder than it seems. Even if Osborne decided, say, to pay out £600m less than Gordon Brown, it would make no contribution at all to cutting the deficit.

How so? The Labour wheeze was to top-off the winter fuel payment with a one-off bonus each year, which was presented as a Gordon’s munificent Christmas gift. Last year it amounted to £600m. The Budget books doesn’t expect this bonus to be repeated, so the future winter fuel payments are only scored as £2.1bn in 2010, not the £2.7bn actually spent in 2009.

The dilemma for Osborne is:

– Find an extra £600m from savings or increasing debt to pay out as much as Brown in 2009, or

– Take the political hit from withdrawing £50 off all pensioners (and £100 off all those over 80), without any upside in terms of deficit reduction.

General election 2015

Countdown to May 7

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The fragmentation of UK politics makes the 2015 general election the most unpredictable in living memory. Follow Jim Pickard, Kiran Stacey and the rest of the FT team for unique insights as the campaign gets underway.

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The authors

Jim Pickard is the FT's chief political correspondent, having joined the lobby team in January 2008. He has been at the FT since 1999 as a regional correspondent, assistant UK news editor and property correspondent.

Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.

Recent Comments

Comment by FinanceWorkerIf ever I was going to have a brain freeze and vote Labour, I certainly wouldn't now. This is an unashamadly sexist ploy which if was done the other way round would attract a huge amount of scorn and …

Comment by Harry LimeWe certainly need higher levels of voter engagement - not just women, but from all groups including the young, ethnic and religious minorities etc. But trust Harriet Harman to take a worthy cause and …